PROJECT MANAGEMENT AND THE BLUE OCEAN STRATEGY APPLIED ON SMALL AND MEDIUM COMPANIES IN BRAZIL

This article is about the combination of the Blue Ocean Strategy together with a Project Management Methodology with the objective to help Small and Medium Companies to surpass the actual financial turmoil and tough competitiviness in the red ocean in order to find their own blue ocean.

PROJECT MANAGEMENT AND THE BLUE OCEAN STRATEGY APPLIED ON SMALL AND MEDIUM COMPANIES IN BRAZIL

By: Luiz Antonio Hermenegildo da Silva, PMP

(luizantonioh@gmail.com)

Brazil is passing through an economic recession together with a political turmoil during the last 8 months. The unemployment rate has reached 11%, representing about 12million of people without their jobs from different economic sectors of the economy. According to Focus Economics Web Site (http://www.focus-economics.com/countries/brazil) their editorial argues that “Brazil’s economy is expected to remain in a deep recession this year as austerity measures, tight credit conditions and high unemployment weigh on consumption”.

Facing this scenario one may ask where Project Management fits on this unstable economy and how it can contribute to its recovery?

In this article, we explain about the basics of Project Management and its benefits to SMBs globally.

The project management techniques applied in small and medium companies can make a huge difference on its business and project performance. It is, also, important to bear in mind that SMBs play an important role in the economy and are responsible for 70% of the job creation and contributes as an engine for the national economic sustainability, specially, in Brazil, (J. Rodney Turner, Ann Ledwith, John Kelly, International Journal of Managing Projects in Business, Vol. 2 ).

The Blue Ocean Strategy Web Site (https://www.blueoceanstrategy.com/blue-ocean-entrepreneurs/) informs that: “Small and Medium-sized enterprises (SMEs) around the world account for 95% of all businesses and 77% of employment on average”.

These above-mentioned numbers can give an idea of the economic scenario we are facing at this moment. In today’s tough times, Brazilian organizations are cutting back on project spend and instead, focusing on squeezing more out from existing resources, trying to keep or increase the Project’s scope or the market share with the same number of resources.

No doubt that failure is certain on this case if this strategy is adopted by any company.

On the other hand, some other companies are subjecting new projects and programme business cases to greater “filtering” in order to adapt to this actual environment.

It is important to inform that Project Management generates innovation, growth and gives the tools necessary to contribute to the reduction of the business/project uncertainties about the investment necessary even on tough times such as this period of the Brazilian economic turmoil.

Project Management, also, allows SMB’s to plan and organize themselves to be ready to face their actual business scenario and explore the new opportunities beyond their horizon considering whether it’s time to navigate far away from the actual red oceans and navigate into the direction of the blue oceans.

The Blue Ocean Strategy, whose authors are W. Chan Kim and Renée Mauborgne, combined with a proper Project Management Methodology give the necessary tools to develop SMB’s efforts towards its new business horizon.

The essence of the Blue Ocean Strategy is captured in eight key points:

1 It’s grounded in data;

2 It pursues differentiation and low cost;

3 It creates uncontested market space;

4 It empowers you through tools and frameworks

5 It provides a step-by-step process

6 It maximizes opportunity while minimizing risk

7 It builds execution into strategy

8 It shows you how to create a win-win outcome

Blue ocean strategy has important tools and frameworks to break away from the competition and create a blue ocean of uncontested market space which are listed below:

All analytic tools © Kim & Mauborgne. All rights reserved.

1. Red Ocean vs. Blue Ocean Strategy Red Ocean vs. Blue Ocean Strategy;
2. Value Innovation;
3. Visualizing Strategy;
4. Strategy Canvas;
5. Four Actions Framework;
6. ERRC Grid;
7. Six Paths Framework;
8. Pioneer Migrator Settler Map;
9. Three Tiers of Noncustomers;
10. Sequence of Blue Ocean Strategy;
11. Buyer Utility Map;
12. Price Corridor of the Mass;
13. Four Hurdles to Strategy Execution;
14. Tipping Point Leadership;
15. Fair Process

From the Project Management perspective, the benefits from the adoption of a proper methodology by the SMB’s will allow them to increase their quality and improve the efficiency in delivering the services. Customer’s satisfaction will also be positively impacted helping the SMB on the development of new services with a high-added value and reduced failure rates, contributing on its migration efforts into the Blue Ocean.

The migration to a Blue Ocean market must be considered as an important Project to the upper management of the SMBs. And as a Project it is crucial to understand that it is mandatory to follow the stages and the Project Knowledge Areas as follows:

Projects can be divided up into five basic stages, which are:

1. Initiation;
2. Planning;
3. Execution;
4. Monitoring;
5. Closing

These stages are linked to the Project Knowledge Areas according to the PMBOK:

1. Project Integration Management;
2. Project Scope Management;
3. Project Time Management;
4. Project Cost Management;
5. Project Quality Management;
6. Project Human Resource Management;
7. Project Communications Management;
8. Project Risk Management;
9. Project Procurement Management

All SMBs from any kind of business area can pursuit the creating of its blue oceans through the implementation of the Blue Ocean Strategy combined with the aid and support of a proper Project Management methodology.

In sum, the international competition is knocking the doors of the SMBs in the same time as the Clients are eager for novelties. The market is tough and margins are decreasing. Few companies will survive and remain on business. So, based on this scenario, it is paramount that SMBs look for market alternatives, they have to find new niches or develop new ones, finding their own Blue Ocean where competition is irrelevant. But to reduce the risks and uncertainties a Project Management methodology is the right path.

References:

1) Rodney Turner, Ann Ledwith, John Kelly, “Project management in small to medium sized enterprises: Tailoring the practices to the size of company”, Management Decision, Vol. 50 Iss: 5, pp.942 – 957;

2) J. Rodney Turner, Ann Ledwith, John Kelly, “Project management in small to medium‐sized enterprises: A comparison between firms by size and industry”, International Journal of Managing Projects in Business, Vol. 2 Iss: 2, pp.282 – 296;

3) Focus Economics Web Site (accessed on October 11^th 2016) – http://www.focus-economics.com/countries/brazil

4) Blue Ocean Strategy Web Site (accessed on October 25^th 2016) – https://www.blueoceanstrategy.com/blue-ocean-entrepreneurs/